Banking & Finance

Nam A Bank and Eximbank may merge

Released at: 16:14, 29/03/2015

Movements in the Board of Directors at Eximbank and its poor performance last year fuel rumors of a coming together.

by Hung Nguyen

Rumors have emerged that Nam A Bank is seeking to merge with Eximbank. Shareholders with 20 per cent of shares nominated two members to the Board of Director at Eximbank on April 22 at its annual general meeting. The rumor is supported by Eximbank’s bad performance in 2014.

Personnel changes

Information published for Eximbank’s 2015 annual general meeting showed that two candidates for members of Eximbank’s Board of Directors are a senior leader and a former leader of Nam A Bank.

Mr. Tran Ngoc Tam, former General Director of Nam A Bank, resigned from the bank on March 24. He was nominated by four institutional and six individual shareholders holding 10.39 per cent of Eximbank. Mr. Tran Ngo Phuc Vu, current General Director of Nam A Bank, was nominated by three institutional and 12 individual shareholders holding 10.03 per cent.

The two candidates therefore have the largest voting rights at Eximbank.

Eximbank performs poorly in 2014

In the last two years Eximbank has fallen into something of a crisis. From being among the five leading private commercial banks, with annual profits in the trillions of VND, in 2014 it announced only VND69 billion ($3.20 million) in profit, with the fourth quarter seeing it lose VND687 billion ($31.9 million).

Despite the bad business performance last year, operating expenses fell slightly, by around 6 per cent compared to 2013. Total losses before risk provisions in the fourth quarter of 2014 were VND289 billion ($13.42 million), 40 per cent higher than the loss recorded in fourth quarter of 2013. Annual profit before setting risk provisions was only VND938 billion ($43.56 million).

Its provisions clearly had a negative effect. In the fourth quarter of 2014 Eximbank set risk provisions of VND589 billion ($27.35 million), nearly five times higher than in the same period in the previous year, and full-year risk provisions were VND869 billion ($40.35 million), or three times higher than in 2013.

Poor performance, high operating expenses and large risk provisions contributed to Eximbank’s losses in the fourth quarter of 2014 of VND878 billion ($40.77 million), 2.7 times higher than in the same period of 2013.

Profit before tax in 2014 was VND69 billion ($3.2 million), a 90 per cent decline against 2013.

Its NPL ratio at the end of 2014 was 1.54 per cent, an increase of 0.25 per cent against the beginning of the year.

Saigon Jewelry Company recently divested its entire take at Eximbank, on March 20.

As pressure from the SBV on restructuring the banking sector mounts and with the events mentioned above, the possibility of a merger between the two banks is becoming more likely.